• Midday comments:

• It appears that the soybean market has begun a further leg down triggered by this week’s USDA report which has left the market staring at bearish weather conditions and a limited time frame in which any dramatic turnaround in crop fortunes and yield can occur. Yesterday’s sharply lower close (basis Nov ’14) near to the contract low made after the report was issued would suggest that the recent choppy sideways price action may well be over. Given the latest weather forecasts, which include ½ to 1 inch of rain across much of the soybean growing area as well as some welcome warmer temperatures, traders are raising their expectation for yields to increase over and above the latest USDA estimate. Further bearishness comes from the historically high crop rating conditions that seem to be never-ending and bode well for the crop to withstand any deterioration in weather, however unlikely that may seem right now.

• Yesterday’s indecisive bounce in corn prices have many discussing how difficult it could be for corn to actually yield above 170 bu/acre for the national average harvest, and this, together with some short covering in the market provided some price support. To counter this, the longer-term downbeat view over demand, which is highly likely to be seriously impacted by surplus wheat supplies around the world, and the fact that the grower in the US is holding a huge “long” (his stock and forthcoming crop) which he will likely sell on rallies has a massive potential to cap rallies. Next week’s weather forecast, as with soybeans, leans bearish although this does not seem to be a story of significance any more because there is little to suggest a cut in yield of any relevance although there is a possibility (strong in our opinion) that an increase to 170 bu/acre or more is more likely. The next story of significance will be demand, and the abundant EU feed wheat supply is likely to curb US corn exports in the long run. Reports from Ukraine on their record high grain output coupled with higher exports is also a limiting factor for US corn exports. This is potentially significant given the need for Ukraine growers to sell in order to raise cash to allow for new crop inputs and plantings to proceed. The ability of the US to grow exports is, in our opinion, likely to be a tough road to take.

• The wheat market, particularly in cash terms, appears to be controlled by the bears who too heart in the increased Russian crop (USDA and private forecasters). Sellers remain active and flows from both Russia and Ukraine appear solid and not subject to politically induced restriction or interference right now. The focus on global wheat output is giving the market bulls a difficult platform from which to perform and the market has reacted accordingly. Markets remain technically oversold and support levels are holding, but it feels that it is just a matter of time before tees are breached and a further leg down begins in earnest. Russian interior prices are at their lowest since 2012 and promised government support to growers appears to be sadly lacking. The suggestions of a 61 to 63 million mt (plus) wheat crop, if correct, look likely to have growers battling low and dropping prices for some time yet. It has to be remembered that the Black Sea region sets global price levels well into the winter period (or at least has done so historically for a very long time) and we see little to change this. As such there seems no evidence of a seasonal price low – for now.

• Longer-term market overview:

• As a general comment, in addition to the three specific product summaries above, it appears an almost “racing certainty” that the US will break a number of records in the 2014/15 crop year. Combined soybean, corn and wheat output is forecast to reach 2 billion mt – a record. Each of the three crops is forecast to exceed its previous record, the first time since 1960 that this has been the case. Each crop is also forecast to exceed its prior year harvest – obviously. Global consumption will not be able to swallow up such volumes and this is the basis for our longer term bearish outlook, and this is before we see any further addition to output forecasts that feel inevitable right now. The world is awash with grains!

• This year will be the second successive year in which global production will exceed consumption, hence our much used phrase “global stock rebuilding”. Combined soybean, corn and wheat production will exceed consumption by 51 million mt according to the USDA report although we believe that figure is too low and could be as much as 60 million mt. Around 100 to 105 million mt of stock has been added globally since 2012.

• The level of “overproduction” has to be placed into context where demand growth is projected at 2 or 3%  in the coming two years, much lower than was the case as the biofuels demand phase grew. S America has largely made its new season planting decisions and it seems that soybeans will be favoured over corn to some degree. The big question, “where is this leading?” feels like there is only one answer – that is that we are facing a lengthy period of weak and uneventful prices unless we see a significant reduction in planted acreages across the world, which we believe to be unlikely. Only in three of the last twenty years have we seen a cutback in combined soybean, corn and wheat planted acreage.

• Post USDA we see further downward pressure and a lower close on new crop soybeans, meal and wheat with corn finishing either side of unchanged. Clearly yesterday’s crop report underlined the potential for the soy and wheat crops around the world. The market appears to be waiting confirmation, from whatever source, of record large corn yield and it may be the September report which does just that.

• Ukraine’s Agricultural Minister announced the 2014 grain harvest could reach a record 63 million mt, which would indicate a corn output of some 28.5 to 30 million mt (vs. USDA’s 27 million mt yesterday). Last year’s output was 30.9 million mt and allowed exports of around 20 million mt, and given their 1 million mt greater opening stock it is entirely possible that this season could see 20 million mt exports again (vs. USDA’s 16 million mt yesterday). Where and at what price remain the questions as the EU will likely curtail corn imports in the face of what seems to be a massive (and growing) feed wheat supply. For what it is worth, current Ukraine pricing shows feed wheat at a $10/mt discount to US Gulf and corn at a $20/mt discount, which is huge!

• Russian wheat yields are continuing to astonish to the upside and private forecasters are again increasing their estimates to between 61 and 63 million mt (vs. USDA’s 59 million mt yesterday, which was a 6 million mt hike on their July figure). With these sort of numbers in the offing we could well be some way off a “bottom” in the Black Sea market, particularly as the (local) N African market will be unable to absorb all of the excess tonnage.

• Finally, in a brief report tonight, the annual Pro Farmer crop tour kicks off next week and, along with the rest of the market, we will be looking to see what yield estimates they arrive at and how they compare with the USDA’s latest offerings.

• Today’s USDA crop report has been received as neutral to slightly bearish for soybeans and wheat, and supportive to corn. US corn yield came in under expectation at 167.4 bu/acre some way short of the most optimistic 174.8 bu/acre plus estimates. Soybean yield came in bang on expectation at 45.4 bu/acre. It is our (and many others ) belief that these yield figures will rise in coming reports. One likely outcome will be the narrowing of the soybean/corn spread on the back of today’s data.

• Interestingly NASS used corn ear weight and ears per acre estimates to derive their yield forecast. The released data showed record ear numbers but a less than record ear weight, and certainly below the 2004 record. Using record weight would increase yield by just over 6 bu/acre to 173.3 bu/acre. Corn end stocks for 2014/15 rose by 7 million bu to 1.808 billion bu and total supply reached a record large 15.243 billion bu.

• US soybean output for 2014 was pegged at 3.816 billion bu, a record large crop and 2014/15 end stocks raised to 430 million bu. Any yield increase will likely see end stocks rising to north of 500 million bu.

• All wheat production for the US was raised 38 million bu to 2.030 billion bu on the back of increased winter, spring and durum harvests. Winter wheat grew to 1.4 billion bu, spring to 572 million bu and durum to 60.5 million bu. 2014/15 all wheat end stock was increased 3 million bu to 663 million bu, almost 73 million bu above the previous year.

• Russian wheat output for 2014 was increased 6 million mt to 59 million mt and Ukraine’s grew 1 million mt to 22 million mt. Chinese output at 126 million mt was 2 million mt higher and Canada’s output was also raised2 million mt to 128 million mt. EU wheat exports were reduced 3 million mt to 25 million mt (still too high given quality issues!) and the overall global balance sheet is undoubtedly bearish given the outlook for supplies.

• To download our USDA recap update as a PDF file please click on the link below:

USDA Recap 12 Aug 14

• Midday comments:

• The early news today was rejoicing the fact that Russia had not invaded Ukraine over the weekend and added to Friday’s lower market it was enough to see the wheat market start on a lower note. Additional downward momentum came from suggestions that Ukrainian farmers who are lacking financial support may well be forced into selling in order to facilitate their cash flow in order to pay for next season inputs. Early news that drier conditions are heading into mainland Europe placed some of the quality issues to the back of the queue for the time being.

• Early corn markets picked up on the bearish lean from wheat as well as market participants building belief that recent rains have “made” the crop. Tomorrow’s USDA numbers are largely being ignored in favour of opinions that crop yields will grow bigger in coming weeks and months in the run up to harvest.

• For soybeans it would appear that unless there is some bullish news tomorrow the market will resume their downward trend with vigour. Front month August is expected to see some fireworks as expiry looms large this week and participants are squeezed, although this is unlikely to impact new crop contracts in any way. Firmness in the market can easily be attributed to strong new crop demand although it still appears that new crop supplies, from a global perspective, are more than adequate.

• Evening update:

• Despite weekend optimism over the Russia/Ukraine situation we received news that 45,000 Russian troops were on the border and this pushed wheat prices higher for a time. The jump was not long lived, but clearly illustrates the “jitters” which exist over this particular issue. Whilst “in the region”, wheat exports from Russia in July (assisted by a 5% drop in the Rouble) were a record 2.4 million mt. Government assurances (Russian government that is) current tensions will not affect grain exports (from Russia that is) helped the currency regain 2% from the lows of Friday. The 2014 wheat crop in Russia is expected to be the largest in six years, and it will be interesting to see quite how high the USAD take their forecast in tomorrow’s numbers.

• Dry weather in Algeria has adversely impacted their wheat harvest where 3 million mt is their likely output compared with an average of 5 million mt. For comparison, the USDA’s latest forecast output is at 5.2 million mt. The significance of such a small crop is that Algeria could well be an importer of as much as 8 million mt in the coming season.

• CBOT markets have been (unsurprisingly) quiet in the run up to tomorrow’s USDA report, which is to be released at 5:00 pm UK time. Tonight’s crop condition report is expected to show an unchanged position which would produce the best rated corn and soybean crop conditions since 2004. Last week’s rainfall in the US saw an estimated 65% of the corn and soybean crops receive ½” and 45% seeing at least 1.0”. These rains will stabilise the crop ratings and warmer temperatures and better midwest rains are now what is required in the latter half of this month.

• Tomorrow will see focus on the EU SnD for both wheat and corn; in wheat the feed volume could well be increased – maybe significantly, and exports may well be reduced by a similar amount in a juggling act! This could easily be mirrored by reduced corn imports as well as reduced overall corn feeding – time will tell. Regardless of the EU position it is almost guaranteed that the report will have the biggest long-term pricing impact that we have seen for some time, particularly in corn and the knock on impact on wheat.

To download the weekly update as a PDF file please click on the link below:

Weekly Update 8 August 2014

Our weekly fund position charts can be downloaded by clicking on the link below:

Fund positions

• Midday comments:

• Yesterday’s strength in wheat came from short covering triggered by global wheat quality concerns, technical indicators turning positive as the market rose, escalating geopolitical risk in Russia/Ukraine and volume spread trading. Overall open interest has grown significantly in Chicago which can lead to sizeable swings when positions are closed in volume. Russian retaliation against sanctions in the form of a ban on agricultural imports from nations participating in the imposition of sanctions has been described as “empty rhetoric” and as an example the US is not in the least bothered about the loss of wheat sales to Russia! However, psychological support has underpinned the markets to some degree and risk premiums have grown in the last day or so. Brazil seems to be “making hay” out of the situation with a reputed agreement for Brazil to accept Russian wheat if quality criteria can be met. In addition it appears that Brazil will be looking to make up the poultry volume into Russia that the US (used to) supply.

• In corn some support spilled over from wheat but the overwhelming long term pressure comes from the forthcoming US harvest volume. Many believe that whatever the USDA yield forecast is next week, it will be surpassed in the September update, and as a consequence the market trend remains downwards. Added to this, the forecast weather conditions remain favourable to corn development with worthwhile rains predicted across the Dakotas and Iowa moving into Illinois and Missouri; the only areas that may potentially miss a soaking are Indiana and possibly Ohio.

• Soybeans appear to have reached an area of good support which even the almost ideal weather conditions have not (yet) broken and the bulls are taking heart. Both weather and yield debates are taking a backseat to outside influences right now and the large fund net short position may well be a pointer towards the recent bounce. That said, weather remains a key factor and its influence should not be underestimated in the longer term as it is almost ideal for maximising soybean output potential this season.

• There appears to be agreement in the Matif wheat delivery debacle with news that both delivery silos have reached an agreement on delivery quality. A minimum protein of 10.5% will now be applied to delivered grains together with a hagberg requirement of 220 (with allowances to 170). Suggestions of potential legal action against the exchange should substantial changes were made have possibly forced the decision. The exchange debacle has effectively crippled the cash market for a week and seen a €13 swing in futures. Cash markets will undoubtedly take a day or two to get back into some sort of order and then weather will become the discussion point once again, which is looking as if it is rending wetter in Europe once again.

• Evening update:

• Early afternoon trade has given back much, if not all, of yesterday’s bounce higher and many are suggesting that even if Russian troops do move into Eastern Ukraine, which was one of the key drivers for higher prices, Black Sea grain trade would continue pretty much unabated. FOB offers from the Black Sea and trade appears to be operating normally and short of the closing of the Bosporus to ocean vessels it appears that this is the default position for now. It would not seem to be in the interests of the EU or the US to see this change.

• US weekly export data released today showed the following:

Wheat: 620,900 mt, which is within estimates of 600,000-800,000 mt.
Corn: 879,600 mt, which is below estimates of 900,000-1,200,000 mt.
Soybeans: 1,103,500 mt, which is within estimates of 1,100,000-1,400,000 mt.
Soybean meal: 731,100 mt, which is above estimates of 300,000-600,000 mt.
Soybean oil: 25,500 mt, which is within estimates of 0-40,000 mt.

• In Europe, Brussels granted weekly wheat export certificates totalling 561,193 mt which brings the season total to 1.964 million mt. This has brought the season closer to last year’s figure, the shortfall being 140,246 mt, or 93.3% of last year. At the same time corn import licences for the week reached 490,000 mt bringing the season to 1.598 million mt.

• The UK wheat harvest has ramped up with 650,000 ha  now cut, an increase from 500,000 ha last week according to data released by ADAS. Weather conditions have been better than other EU countries, mainly dry which has helped with progress, which is more advanced than in recent years. According to the report yields are above average, the range 3.7 to 13.0 mt/ha compares with an average of 7.7 mt/ha. Quality, which is important given the less than ideal results in continental Europe, appear good as far as both specific weights and hamburg falling numbers are concerned. Specific weights of 77 kg/hl appear average so far, way above the desperate results seen in the wet 2012 which recorded 69.6 kg/hl. Hagbergs averaging 308 are well above average and better than many continental results. However, news is not all good with protein ranging from 9% to 12.5% with averages suggested to be below 12%. Clearly with 80% of the UK wheat harvest still to be gathered the weather in the next week or so is crucial.

• In Brazil CONAB have estimated the 2014 corn crop at 78.55 million mt, the winter crop being 46.87 million mt. With the second best harvest on record and funding to get the crop to export terminals we would expect to see Brazil as a major world exporter this year.Their soybean crop estimate was reduced by almost 600,000 mt due to rain impacted harvest losses particularly in Mato Grosso. The CONAB report has been seen as supportive to soybean markets but bearish for corn.

• Midday comments:

• To start the day we see a good portion of the midwest forecast to receive between ½ and 3 inches of rain in the next week which makes any bullishness in the market difficult to hold on to. Talk of some crop regions needing rain has tempered the big picture somewhat and early season lows are hard to score right now so early in the season. Soybean markets came close to season lows once again only to be thwarted by the near record short position dictating that cover was taken later in the session (see Evening Update).

• Corn markets appear to have stalled ahead of next week’s USDA report despIte a 168-172 bu/acre analyst range, and the lower end bing forecast for next week’s report NOT for the final outturn. Regardless, anything within that range will mean a BIG crop by any standards and it may be appropriate right now to focus upon demand rather that supply going forward. The big question is, “Where is the demand going to materialise?” Potential for a reduced S American crop does exist as we have mentioned, but large global grain stockpiles will likely pressure prices for some time to come.

• Wheat has been the upside leader for a couple of days as tension escalated on the Russian/Ukraine border and appetite for risk reduced. The shorts have been unhappy to hold onto their position and covering has dictated the move to higher prices.

• Evening Update:

• Key today has been nervous short covering, particularly in the grains although the soybean complex has been pulled upwards, on worries over increased Russian troop movements along the Ukraine border. Suggestions that Putin is about to move troops across the border under the guise of a “peacekeeping force” are gaining credibility. Russian support for their cultural cousins appears to be gaining momentum and this could escalate the risks for a cross border conflict to erupt in  more dramatic fashion. It has been noted that Putin has not sought parliamentary permission although his track record of irrational acts would suggest that this is not necessarily the way in which he would behave!

• Ukraine’s actions over the last couple of weeks have clawed back about half the territory that separatists formerly controlled, and it could be that Putin is merely “sabre rattling” and looking to cheer on the rebels in Ukraine. However, we are heading into a big weekend and an influential report next week, and “risk off” is the name of the game right now, particularly if there are profits to be booked.

• Black Sea wheat prices do not appear to have followed CBOT or Matif and to all intents and purposes is currently unchanged. Whether this remains the case will be interesting to see in the next day or so. As CBOT levels rise they become less competitive into export markets and potentially increase the likely US end stock position.

• Russia, in retaliation against recently imposed economic sanctions, has banned imports of agricultural products from those nations who have supported sanctions. At this time the US appears the loser as they supply (or used to supply) pork and poultry as well as soybeans.

• Discussions over the Matif wheat specifications for delivery have not reached agreement with one of the elevators involved looking to their board of directors for direction. The debate seems set to continue for a while yet leaving uncertainty, which markets (and traders) hate, and placing contract delivery into doubt – at least for the time being.

• All in all, we are looking at a fundamentally bearish physical position in global grains and oilseeds, which we have been writing of for some time – BUT – right now there is a fear over the geo-political situation which may intervene and disrupt the trend. However, our longer term view is that the big picture will prevail in the longer term and that prices will ultimately be driven by growing global stockpiles as well as potentially diminishing international trade.

• Midday comments:

• Last night’s US weekly crop condition and progress report showed winter wheat to be 90% harvested, which is ahead of last year (86%) and the five year average (85%). The spring wheat crop is rated 70% good/excellent, better (by 2%) than the five year average. Possibly more importantly, corn rated as good/excellent dropped 2% from last week to 73%, which is better than last year (64%) and the ten year average (60%). Soybean good/excellent ratings were unchanged from last week at 71%, which is better than last year (64%) and the ten year average (58%). The trade was expecting some decline in soybean condition and the added rainfall in forecasts may well see the crop hold condition, or even improve a touch next week. Regardless, the crops are in as good condition as many can recall – long may this continue!

• The latest Brazilian trade data for July was released at the end of last week and unsurprisingly soybean exports are following the normal seasonal volume decline, but remain at record large rate. July was 850,000 mt less than June, but 390,000 mt higher than last season and 1.9 million mt above the five year average at a touch above 6 million mt. The marketing year to date (Feb-July) stands at 37.8 million mt, which is 6 million mt ahead of last year and a record large for this stage of the season. The USDA’s latest forecast of 45.8 million mt for the year now looks woefully light!

• Brazilian offered prices for soybeans remain below the US into late summer and they continue to attract business. Despite this, even with record large exports, it would seem that Brazil is likely to finish the year with a three year high end stock of 3.6 million mt and a stock/use ratio of 4.2%. Such a comfortable stock position is likely to add to price pressure, in particular capping any rallies and potentially adding competition to early season US prices.

• Some concerns of reduced output of quality wheat in Europe and Ukraine together with some short covering by the close to record short market position added support. This is countered by improved US spring wheat condition and better prospects for Russian output as many are reporting and is likely to be reflected in next week’s USDA figures, and may keep a lid on any rally.

• In corn we saw a degree of strength coming from short-term dryness which triggered some short covering as well as pre-USDA report position squaring. That said, global fundamentals seem to have become more bearish even in the space of a week as the French feed grade wheat excess (due to switching from quality output as a result of wet harvest weather) and the possibility that this may also be a feature in Ukraine, becomes more widely discussed. News of Brazil’s proposed 7 million mt corn freight subsidy, which we reported on last night, is also price negative.

• Soybean news continues to revolve around weather and the market reacts rapidly to changes in forecast. Recent wetter weather and further prospects for more rain in the forecasts will, if it materialises, likely see yield forecasts grow higher still.

• Finally, we saw F C Stone issue US crop estimates late on yesterday and they continued the theme of larger crops which has been the trend. Their corn yield was 172.4 bu/acre vs. the latest USDA figure at 165.3 bu/acre. Their output number of 14.455 billion bu compares with the USDA at 13.86 billion bu. The soybean yield was estimated at 46.0 bu/acre vs. USDA at 45.2 bu/acre. Output of 3.865 billion bu is also higher than the USDAS’s latest 3.8 billion bu.

• Evening update:

• Informa Economics have joined in with the crop estimate throng, and their figures are corn yield 168.0 bu/acre with output at 13.988 billion bu (both figures an increase from their last estimates). Their soybean forecast is 44.5 bu/acre with output at 3.7 billion bu both of which are unchanged month on month. Interestingly the Informa estimates are amongst the lowest in the recent spate of forecasts although we should bear in mind that they try not to forecast the crop but to peg where the USDA’s NASS figure will be published.

• Markets in corn and soybeans are heading into the close at lower levels whilst wheat continues to find a degree of support from short covering before next week’s USDA report.

• Russian wheat output remains a key discussion topic as near record crop estimates continue to come forward. The potential for their exports to fill the gap which may be left by the EU, in particular France, is growing. Given the abundance of feed wheat supplies that is staring Europe squarely between the eyes the potential for Ukraine corn imports looks as if it could well be curtailed, leaving Ukraine searching for an outlet.

• It could well be a significant change in fortunes for both Russia and France (EU) in the coming season, last year Russia exported 19 million mt and the EU 30 million mt and we would not be surprised if these figures saw a marked reversal given the potential for Russia to have an exportable surplus of some 30 million mt.

• Finally, meetings are taking place this week to resolve deliverable quality specifications for MATIF wheat.The outcome is far from predictable and the prospect of multiple lawsuits is high if the “wrong” outcome is reached.

• Midday comments:

• In wheat we saw short term support arising from ongoing quality concerns across Europe as markets tried to hold onto Friday’s gains but weaker soybeans and corn saw an undermining effect which was assisted by fund selling. The week started with a bounce, the question being, “is it of the dead cat variety” or not? Wheat posted gains in Europe after trading down to four year lows, marking technically oversold levels once again, and any short term recovery comes as little surprise. G+Harvest in France was reported to be 76% complete at 28 July compared with 44% the previous week.

• Corn markets are anticipating a slight downgrade in weekly crop condition, maybe 1% or 2%, and short covering is assisting prices slightly at the start of the week. The wetter weather forecast remained in place over the weekend and has seen additional precipitation added in key growing areas.However, some suggestions that parts of the north and east could miss out have triggered some buying. If the rainfall forecasts are fulfilled, it could well ensure that many corn crops are “made” this week.

• Analysts ar rapidly increasing their corn yield estimates, Linn Group issuing 172.8 bu/acre which would give an output of 14.518 billion bu; Doane Advisory Service released 172.3 bu/acre and 14.4 blllion bu. Using an average of the two in the USDA’s latest SnD leaves carryout at 2.3 billion bu, and it was 2007 since we sat saw in excess of 2 billion bu carryout! Suggestions that subsidised transport in Brazil will be granted to facilitate and grow exports will not be seen as bullish or friendly to US growers and exporters.

• Soybean markets saw contract lows on Sunday night although the weather forecast triggered something of a recovery as short covering gathered momentum. Regardless of the here and now, the crop has seen almost ideal weather this summer and if forecasts prove correct in the first half of August we can not help but believe prices are currently full value if not fully overvalued! Crop condition reports from on the ground in Illinois are showing some of the best crops on record. Illinois and Iowa are the two top producing soybean states and the apparent lack of poor crop stands suggests that any significant downgrade is unlikely at this time.

• An eventual yield of 46.5 bu/acre, which is “only” just under 3% above the current USDA figure, would suggest an end stock of 526 million bu and stock/use ratio of some 14.8%. These figures can only be described as “very bearish” given the potential for greater than 3% yield improvement , particularly if August rains materialise.

• The potential for Brazil to plant more soybeans, at the expense of corn acres, is also a bearish factor. Whether this actually transpires or not, as growers may choose the fallow option, remain to be seen. Additional acres in S America will not be viewed as bullish under any circumstance.

• The recent upturn in soybean prices has undoubtedly assisted in correcting the oversold situation but the market remains oversold. Despite the net speculative short position we are still staring at a world awash with oilseeds, including soybeans, and that is before we factor in higher yield potential. We will leave it to you to work it out!!!

• Evening update:

• Brazil’s AgRural has estimated the 2014/15 soybean area at 31 million ha, an increase of almost 5% year on year. The 2014/15 crop is estimated at 94 million mt, an increase from 21013/14’s 85.6 million mt and well above the USDA’s 91 million mt estimate.

• In Russia, IKAR have estimated the wheat cep at 58.5 million mt, a 1 million mt increase from their last figure and a six year high.

• Stratégie Grains have raised their EU rapeseed output forecast to 22.9 million mt, up 400,000 mt month on month, and an improvement from 21.1 million mt year on year.

• European milling wheat premiums jumped again even as MATIF gained €1.50 ahead of Wednesday’s key  meeting on deliverable specifications. Further rainfall forecasts and weekend rains have left the trade somewhat paralysed and Black Sea sellers in deferred positions reluctant to jump in. Ukraine’s yield is running 18% above last year and Russia is 20% up, both being underestimated by the USDA to a significant extent.

• The European weather forecast looks bad from a wheat perspective with ten days of alternating rain and sun, which will defer the harvest and potentially increase sprouted grains. The UK forecast has changed to  much wetter conditions, and with just 10% done growers must be getting frustrated. However, EU corn crops are looking about as good as could be expected, and potential output can only be described as huge.

To download the weekly update as a PDF file please click on the link below:

Weekly Update 1 August 2014